Making calculation social. Or, how the iPad might reshape financial markets
February 1, 2010
The launch of Apple’s tablet has produced a large volume of misguided complaints. My favorites are about the lacking affordances of the iPad: underpowered, no multi-tasking, etc. But as we know from the academic literature on science and technology, the key to successful gadgets is to offer new “affordances” that are lacking in previous artifacts. The proverbial killer app. Of course, my research is not on science and technology. So here’s the question that I’m asking of the iPad… as a sociologist of finance. What possibilities does a tactile, mobile device like the iPad bring to securities trading?
I’ll venture a guess. By bringing together calculation and social interaction, numbers and people, judgement and logic, the iPad may rejuvenate financial exchanges, making them more calculative. And also reinvigorate trading rooms in banks, freeing arbs from their chains of their desks.
Before going into details, let me clarify why I laugh at the tabletskeptics. Essentially: because we cannot judge a new technology by how it fulfills our present needs. “No-one we know takes photos with the cellphone… who needs one?” Such was the reasoning by Nokia back in 2003. And thus Nokia got stuck with camera-less phones for too long, giving away part of its market to the Asian manufacturers. What Nokia missed was that people would take tons of photos with the phone if they had the ability to do so. New affordances create new needs. The challenge is to imagine those needs before they arise.
Interestingly, Steve Jobs does not get this simple point. Or at least that’s what I got from watching his presentation of the iPad. For the tablet to be justified, Jobs said, it should let you browse the web better than a computer and a phone. Actually, it’s the opposite. The tablet should focus on new things that only a widescreen mobile wireless device can do. Social web browsing, for instance. Or situated problem-solving. Marrying mobility and Excel, flicker and pubs. (It is also puzzling, by the way, that Jobs presented a social, mobile device sitting by himself on a comfy chair).
On that front, discussion on the media about the iPad has been rather boring. Self-centered. A media debate about the effects of the tablet… on the media. And, sure enough, charging for reading webs, combining movies and text — all those points are adequate. (Indeed, I recommend this smashing video about what Sports Illustrated could look be on the iPad.) But my passion is markets. Do I care about publishers?
So — enough digressing. My real interest is understanding the implications of the tablet for financial markets. Traditionally, the introduction of computing into trading led to a sharp divide: work standing up, and work sitting at a desk. Those who stood up, e.g., floor brokers and specialists at the NYSE, did not use computation heavily. And those who sat down — e.g., arbitrageurs in hedge funds — had the benefit of the desk. And of being able to use the computer or Bloomberg as a calculation device. They got models, charts, algos. The downside for them was relative isolation: they could talk to far fewer people face to face than a floor broker. As a result, those who moved around were heavy users of judgment and social cues. Those who sat down were more focussed on models and algorithms. Or spent their day talking on the phone (to a doughnut, as Tow Wolfe famously described).
That divide held for a time. Exchanges had people standing. Banks and hedge funds had them sitting down. But soon enough technology arrived to trading floors at financial exchanges. One unnecessary (and sad) approach to the mix the two was to replace people by computers. Witness the empty floors of the Paris Bourse, aptly captured in the research of Fabian Muniesa. Or the Bolsa de Madrid. (And to really witness… here are my pics of the Bolsa).
So one approach — get rid of the people. Another, far more interesting approach, has been to endow floor brokers and specialists with technological tools that give them extra calculative possibilities. The New York Stock Exchange has recently been working on this. It produced a revolutionary plan to introduce desks inside the trading floor. Instead of taking people out, they bring the furniture in. See here video here.
This is a very interesting development, but not the only one. Yet another possibility is to place the large screen on the hands of the mobile floor traders. I first witnessed such endowing in 2005. I was in a guided tour of the New York Mercantile Exchange (NYMEX). Squinted from the observation deck, we saw traders at the pits carrying white, Kindle-looking devices on the arms, which they tapped with a stylus.
Manufactured by Fujitsu (I did ask), these machines allowed the traders to see “the market” and trade from their screen without leaving the desk. The machine was light and sturdy enough to be carried into a physically threatening environment — the pit. Used in this manner, the handheld brought together the affective insights produced by a social pit (and masterfully described by Kate Zaloom) with the calculative possibilities created by the computer. It also allowed traders to better handle the anonymity, as they could trade from their tablet without signaling their operation to the crowd. Or do the opposite, and attempt to influence the price.
My point is, the tablet mixes like no other device the possibilities of mobility and calculability. It adds context to the screen. And it brings numbers to the stuff around you. It is conceivable that the introduction of tablets will make professional trading environments simultaneously more intellectual and more social than ever in the past.